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MEPS EXPECTS A SLIGHT RECOVERY IN GLOBAL STEEL PRODUCTION IN 2016

MEPS (International) Ltd believes that worldwide crude steel production will be reported at 1.62 billion tonnes in 2015 – equivalent to a decrease of almost 3 percent. It will be the first reduction since 2009 – in the wake of the Great Recession.

Steel markets around the world are oversupplied relative to current requirements. Demand from many of the largest steel consuming countries – China, Japan, South Korea, Brazil, Russia and the United States – is likely to fall this year. However, a modest upturn in global output is anticipated in 2016. MEPS forecasts steel production at 1.64 billion tonnes next year. This represents an increase of 1.2 percent, compared with 2015.

The current weak conditions have led to heightened competition to secure orders outside the country of origin. Steel prices in export markets, which are usually denominated in US dollars, have been further eroded by the depreciation of currencies. The growing amount of trade defence measures has made it increasingly difficult for surplus material to find a home.

In recent months, the reduction in steel prices has been more pronounced than the fall in raw material input costs. Consequently, mill margins have come under a great deal of negative pressure. With the traditional Autumn pickup in purchasing virtually absent this year, steelmakers have been forced to cut production further. Several temporary and permanent closures have been undertaken and there is uncertainty regarding the future of a large number of steel plants worldwide.